Local Government Pension Scheme Guide
The LGPS is the UK’s largest public sector pension scheme with around 5.9 million members and over £350 billion in assets. It is a Defined Benefit CARE scheme with one of the most generous accrual rates in the country at 1/49th per year. Unlike other public sector schemes, the LGPS is funded through 101 local pension funds.
Updated July 2026 · 2026/27 figures
The LGPS covers council employees, school support staff, and workers at a wide range of other public bodies. Understanding how the scheme works — and how to use its AVC and 50/50 options — can significantly improve your retirement outcome.
Key LGPS facts
| Feature | Detail |
|---|---|
| Type | Defined Benefit (Career Average) |
| Accrual rate | 1/49th of pensionable pay per year |
| Revaluation (accumulation) | CPI annually |
| Pension increases in payment | CPI annually |
| Normal Pension Age | State Pension Age (currently 66) |
| Employer contribution | Typically 15–25% of pensionable pay (varies by fund) |
| Active members | ~2 million |
| Total members | ~5.9 million (active, deferred, pensioners) |
| Total fund assets | £350 billion+ |
How the LGPS works
The current LGPS (in England and Wales) has used a Career Average Revalued Earnings (CARE) design since 1 April 2014. Each year, you earn a pension of 1/49th of your actual pensionable pay for that year. The slices revalue annually in line with CPI.
Accrual example
A Local Government Officer on £30,000: £30,000 ÷ 49 = £612.24 of annual pension earned that year. After a full 35-year career averaging £34,000, that builds to roughly £24,286/year before CPI revaluation. Combined with the State Pension, this provides a secure retirement income.
At 1/49th, the LGPS has a more generous accrual rate than the NHS (1/54th), Teachers (1/57th), Police (1/55.5th), Civil Service Alpha (2.32% ≈ 1/43rd — note: Alpha is slightly better at 1/43rd), and Armed Forces (1/47th on AFPS 15). Among the mainstream CARE schemes, LGPS sits alongside AFPS 15 as one of the most generous.
Employee contributions (2026/27)
LGPS contributions are tiered by actual pay, not just pensionable pay. The banding applies to your actual gross pay for the year:
| Actual pay band | Member contribution |
|---|---|
| Up to £17,600 | 5.5% |
| £17,601 – £27,600 | 5.8% |
| £27,601 – £44,900 | 6.5% |
| £44,901 – £56,800 | 6.8% |
| £56,801 – £80,900 | 8.5% |
| £80,901 – £113,400 | 9.9% |
| £113,401 – £135,700 | 10.5% |
| £135,701 – £203,600 | 11.4% |
| Over £203,600 | 12.5% |
Employer contributions vary by fund and employer, but typically range from 15% to 25% of pensionable pay. Employers must ensure their fund is fully funded; a triennial actuarial valuation determines employer contribution rates.
Pre-2014 benefits: final salary preserved
Benefits accrued before 1 April 2014 remain under the old final salary rules. These are calculated using your final pensionable pay at the time you leave the LGPS, multiplied by the relevant final salary accrual rate:
- 1/60th for service from April 2008 to March 2014 (no automatic lump sum)
- 1/80th + 3/80ths lump sum for service before April 2008
The “final pay” used for your pre-2014 benefits is your actual pensionable pay in the year you leave (or the best of the last three years if that is higher). This means pay increases near retirement can improve older LGPS benefits substantially.
The 50/50 option
The LGPS offers a unique 50/50 section that lets you temporarily halve your pension contributions in exchange for building up half the normal pension accrual. Under the 50/50 option:
- You pay half your normal contribution rate
- You accrue pension at 1/98th per year (half of 1/49th)
- Full death and ill-health cover continues at no extra cost
- You can switch back to the main section at any time
The 50/50 option is designed for members under temporary financial pressure. Over a long career it significantly reduces your pension, so it should not be used as a permanent arrangement.
Once you know your LGPS entitlement, add it to Isaac as a defined benefit pension and model your retirement date alongside State Pension and other savings.
Try Isaac free →Additional Voluntary Contributions (AVCs)
Every LGPS fund offers a Shared Cost AVC (SCAVC) arrangement, typically with a provider chosen by the fund (Prudential, Standard Life, Legal & General, or others). AVCs are invested in a DC-style fund and can be used at retirement to:
- Take a tax-free lump sum (up to 25% of the combined AVC and LGPS capital value, subject to the Lump Sum Allowance)
- Buy additional pension from the LGPS
- Transfer to a personal pension or annuity
AVCs are a tax-efficient way to save extra for retirement alongside your LGPS pension, particularly for higher-rate taxpayers who receive 40% relief on contributions.
Normal Pension Age and early retirement
The LGPS NPA is State Pension Age (currently 66, rising to 67). Your full LGPS pension is payable from NPA without any actuarial reduction.
You can retire early from age 55 (rising to 57 in 2028) with your employer’s consent, subject to an actuarial reduction. The reduction is approximately 4–5% per year before NPA. Retiring 5 years early typically reduces the pension by around 20%.
Some LGPS members have protected lower retirement ages from before 2006 — if you joined before April 2006, check whether you have transitional protection allowing retirement at 50 or an earlier NPA.
Death benefits
- Death in service: Lump sum of 3× assumed pensionable pay
- Survivor pension: 1/160th of pensionable pay × years of membership per year (approximately 37.5% of the pension you would have earned to SPA)
- Children’s pensions: Paid to eligible dependent children
- Death in deferment: Lump sum of 5× the deferred pension
- Death in retirement (within 10 years): A top-up lump sum to ensure at least 10 years of pension has been paid in total
The 101 local pension funds
Unlike other public sector schemes administered centrally, the LGPS in England and Wales is managed through 101 separate local authority pension funds — one per administering authority (typically a county or metropolitan council). Each fund:
- Manages its own investments (subject to national regulations)
- Sets its own employer contribution rate (based on triennial valuations)
- Administers member records and payments
- Has a Pension Fund Committee responsible for governance
This means your LGPS pension is administered by your local fund — for example, London Borough of Lambeth Council employees are in the London Pension Fund Authority (LPFA), while Kent County Council employees are in the Kent Pension Fund. The scheme rules are the same nationally; only investment performance and employer contribution rates differ.
Practical planning tips
- Get your annual benefit statement: Log in to your local fund’s member portal (or request a paper statement) to see your accrued pension and projected income
- Understand your pre-2014 final salary benefits: A salary increase late in your career can significantly increase your pre-2014 pension entitlement — this is worth understanding if you are approaching retirement
- Consider AVCs if you are a higher-rate taxpayer: AVCs attract 40% tax relief at source and can be used for a tax-free lump sum at retirement
- Do not use 50/50 long-term: Halving your contributions for a few months during financial hardship is fine; doing it for years has a major long-term impact on your pension
- Model the full income picture: LGPS + State Pension together often provides a very comfortable retirement — but make sure you know the actual numbers, not assumptions